While link surfing earlier today I ran across the term “BATNA”, and while I had seen it before I couldn’t remember what it meant. A quick trip to the Best Alternative To a Negotiated Agreement article on Wikipedia was a great refresher: when you’re negotiating, the BATNA is the alternative that the other party will go with if they don’t choose to go with you. Sometimes this is a competitor, but often it’s “the same way we’ve always done it” or “we just won’t do it” or something similar. Part of successfully negotiating is discovering what the other party’s BATNA is and realizing that you have to beat it to win the deal. Keeping the BATNA in mind can also help you ensure a win-win outcome to the negotiations.

What does this have to do with selling services? Well, you need to think about the BATNA your potential customers have in mind when they’re reviewing your service. Is it one of your competitors? Doing it on their own? Not doing it at all? What are you offering them that makes your service better than their best alternative? How are you convincing them of that extra value?

I don’t know about your service, but when I think about Spreedly in these terms, I realize we have a lot of work to do. Folks who are interested in our service always have alternatives in mind, and while in almost all cases we beat those alternatives hands down, that’s not necessarily easy to figure out. For instance, many folks figure they’ll just use their gateways recurring billing service to handle their subscribers, and before Spreedly came along that was often the best alternative. Spreedly, though, has multiple advantages over gateway-based recurring billing; multiple gateway support, a usable UI, and quicker integration to name three. But we don’t currently do a good job of making that value-add clear.

What BATNA’s do your prospective customers typically have in mind? What techniques have you found effective for presenting your service as superior?

One of the things you have to do constantly when working on a product over the long haul is update your outdated legacy assumptions. One of those assumptions in the early days of Spreedly was that there wasn’t anything terribly sensitive shown on the subscribe page, so it didn’t have to be authenticated to a particular subscriber. Even if we pre-filled it with data, the most anyone would see is someone else’s name. Also, was a miscreant really going to pony up their credit card in order to buy someone else a subscription? <sarcasm>That would just be so mean!</sarcasm>

But when we originally made that decision it was before we collected a subscriber’s email (a long time ago!). There is a privacy concern with emails leaking if someone figures out another user’s Spreedly customer id. Also, what about when we do start to pre-fill credit card data, i.e. allow someone to upgrade/downgrade without re-entering their details? Since we plan on adding that ability soon, we knew we had to tighten up the subscribe page’s security.

At the same time, we didn’t want to complicate getting started with Spreedly, and we didn’t want to break everyone currently using it. The subscribe url as it is today is still a great solution so long as no data is pre-filled. So here’s what we came up with:

If you’re in the European Union, we have some exciting news for you: Spreedly now supports the Iridium Payment Gateway! Iridium was originally requested by a Spreedly client in Spain, but it’s also an option in the UK and some of the other EU countries as well. Integration is simple, and we even have a full Setup Guide to walk you through the process once you have your credentials.

Iridium makes the ninth payment gateway supported by Spreedly (the full list is here) and there are more to come!

Did you know that Spreedly tracks a “credit” amount for each subscriber? This internal account is critical to our pro-rating process, but it has a lot of uses beyond that. It’s a great way to give someone a discount on future service when they’re already a subscriber – just go into the UI, add $30 of credit, and it will get automatically applied to the subscriber’s next invoice.

Until now you’ve only been able to add credit via the UI, but we just rolled out the ability to add a credit via the API. This opens up a whole new set of possibilities, as now you can implement automated incentives and rewards for your subscribers. A few ideas:

• Hook it into an affiliate system and automatically give subscribers store credit when they sign up a friend.
• Hand out coupon codes and put a box on your account page that lets a subscriber apply a code and get a credit. Spreedly will support this in-system eventually, but why wait on us?
• If you have a system outage (oops!) write a little job that gives everyone affected a $5 credit. That’s the sort of service that turns customers into fanatics.

What other ideas do you have for leveraging the Add Credit API?

We have a small new feature for you today, or rather a new way to access an old feature. Spreedly’s long had the ability from the admin UI to add lifetime complimentary subscriptions, allowing you to give your family, friends, and biggest supporters free access forever. I just checked, and this feature has been used hundreds of times since we first launched it.

But as so often happens, we release something and our clients – all of you! – think of uses we’d never even dreamed of. In particular a lot of folks have wanted to track all their users in Spreedly, not just the paying ones, and a lifetime comp with a feature level of “free” seemed like a nice simple way of doing that. But since it wasn’t possible to add lifetime comps via the API, it wasn’t a workable solution.

That is, until now: check out the documentation for the new Lifetime Comp API and let us know what you think. We’re betting there are even more uses for it that we haven’t thought of yet, and we’re waiting for you to tell us about them.

This is a specific example of a general process we try to follow: work to add general purpose tools and then see how clients use them. Learn from that and tweak the tools to be even better. Rinse, repeat. And of course what makes it work is the amazing feedback we get from all of you – keep it coming!

It’s pretty amazing when you slip a new feature in, and before you even announce it, you see that it has already been used over a dozen times. So it is with in-Spreedly refunds, the latest feature we’ve rolled out to help you as you interact with your customers. Using this new feature you can refund your customers from right within the Spreedly interface, making it easier than ever to turn a disgruntled customer into a fanatic customer.

We went ahead and recorded a quick screencast to walk you through it:

(FYI, this is raw and uncut, so you’ll probably notice an incorrect flash message about half way through. It’s already been fixed in production.)

The folks over at Creately recently ran an experiment to help them figure out how to price their service. In it, they allowed customers to choose their own price – from $1 all the way up to $100 – and used the data from the experiment to validate and set their ongoing prices. This is really similar to the pick your price setup that Radiohead did for their 2007 album, but Creately is a recurring service rather than a single purchase product.

Of particular interest to me in the context of Spreedly was this quote:

Another very interesting point that stood out from our experiment is the difficulties that so many of our users faced with completing their subscriptions with PayPal. The complaint emails as well as large percentage of abandoned transactions – forced us to work on alternate payment methods.

While Spreedly doesn’t currently support a “pay what you want” plan, we’ve already seen a need for ad-hoc plans, and hearing about this experiment makes them all the more interesting. We definitely want to give you the tools to experiment with your billing, and this could be a really powerful one. Look for more on this topic in 2010.

In the meantime, definitely check out Creately’s experiment, and let us know if you’ve heard of other good ways for subscription businesses to experiment with pricing.

One of the most important tasks I (Nathaniel) handle at Spreedly is pre-sales and customer support. It’s critical that I am the one handling it at this point in Spreedly’s life for two reasons: first, because awesome customer support is core to Spreedly as a business, so as CEO I am setting the long-term tone and putting in place the procedures that will make it great over the long haul. And second, since I’m responsible for making sure Spreedly as a business has a clear and coherent vision and direction, being in constant contact with customers helps me stay very aware of where we’re at and where we need to go.

But if customer support is one of the most important tasks I handle, it’s also one of the hardest, but not for the reasons you might think. I don’t mind the time, or the occasional complaint, or researching the various questions we get. What I find really hard is when someone asks for something that I know Spreedly needs, but that we’re just not able to roll out yet. As a founder of Spreedly, I feel the inadequacies in it strongly, much more strongly than I had ever imagined before getting to this point. When those inadequacies get pointed out, saying “I know, that would be awesome, but no we don’t have it yet and we won’t for a while,” is really hard.

When 37signals tells us to Start with No, what they fail to mention is just how hard it can be to do so. But better to say “no” than to make false promises and let people down. So I shall continue to persevere, and now you know that when I say “no” to something you ask for, I probably want it even more than you do!

Equal partnerships are hard to make work. I’ve seen them fail even when the most easy-going, non-demanding people are involved. But the benefits of having co-founders are huge: moral support, complementary skill sets, high levels of commitment, etc. So how do you bring cofounders in without getting stuck in a bad situation?

Before we can fix them, we have to at least have a theory on why equal partnerships fail so often. There are lots of opinions about it; here’s mine: I think equal partnerships (50/50, thirds, quarters, etc.) often end in unresolvable conflict because the buck doesn’t stop at anyone’s desk. It’s not so much a rights thing as it is a responsibility thing: who’s ultimately responsible for resolving disputes, providing focus, and making the business successful? Of course everyone has a part in each of those things, but when there’s a disagreement, who takes responsibility not just for resolving it but also for the results?

The last few months have been really exciting for Spreedly – signups have accelerated, we’ve had a constant stream of great conversations with existing and potential clients, and new client-facing and back-end improvements have rolled out at an accelerating pace. Each week still has its lows as well as its highs, but the latter are starting to outnumber the former at an increasing rate.

With that, I’ve been thinking a lot about what it took to get to this point – it was no easy road, and I understand more than ever why so few of us manage to start a successful business. But while it might be hard, building momentum is also much simpler than I ever realized before I got to this point. As a matter of fact, part of the reason so few do it is that it is so simple. You have one task, and you must do it every day:

Make your business system a little bit better.

Note the system – it’s not about making the business better right now, it’s about making the business better in a year. And that’s why it’s so hard to do – it involves delayed gratification, and most would-be entrepreneurs have long ago quit by the time their “overnight success” train would’ve pulled into the station.

There’s more to be said about business systems, incremental improvement, and the years of work that engender an overnight success, but for now I’d encourage you to just think about one thing every day:

“In what small way can I improve my business system today?”

As interest in Spreedly has grown and we’ve talked to an ever increasing number of potential clients, a recurring theme with prospects has been our pricing. While most folks see huge value in the platform, they’re often very concerned about paying us a percentage of their revenue for as long as they’re using Spreedly. Especially after the merchant account takes their cut, 3% per transaction starts to look pretty rich, especially for large-dollar transactions.

We’ve heard that concern, and that’s why today we’re extremely pleased to announce new pricing, not just for new accounts but also applied going forward for everyone who has signed up to date. The $19/month charge stays the same, but we now charge a flat 20¢ per payment transaction instead of a percentage. For those interested in offering very low dollar value plans, we’ll actually charge you the lesser of 20¢ or 2%, so you don’t get penalized by the flat fee.

As clients using Spreedly grow their businesses they start hitting new challenges that Spreedly hasn’t had to handle yet. One of the recent ones has been the problem of an unmanageable number of subscribers: a great problem to have, but really annoying if you’re the one having to deal with it. Spreedly started out with a simple paginated list of subscribers that worked great for a few dozen entries but has really started to wear thin as clients have started accumulating hundreds of subscribers under active management.

We knew we had to do something about large numbers of subscribers lest we become the cause of the premature graying of our best clients. As usual we’ve chosen to iteratively attack the problem, starting with a straightforward search function that has so far proved super useful even in our own usage of Spreedly. We also show a list of the most recently touched subscribers so it’s easy to see at a glance what’s going on with signups. And of course the full paginated list is still available for flipping through customers a page at a time.

One of the things we love about building Spreedly is that every time we improve the platform it improves for everyone using it. In the bad old days when everyone managed their own billing, improvements like this took time away from the core app. Today, though, you get to come along for the ride as we work to make Spreedly a profit center for your business rather than the cost center that homegrown billing always is.

Enjoy subscriber searching, and keep the feedback coming – it’s key to our quest to build the best billing platform ever!

It was with great pleasure and anticipation that Spreedly sponsored the Rails Rumble this year, and we weren’t disappointed: there ended up being a mind-bogglingly amazing field of entries. With applications ranging from the fun Lazeroids (argh – just lost ten minutes!) to the useful hurl (might come in handy for poking at the Spreedly API!) the skills and creativity of the Ruby on Rails community were on front and center display.

As promised, the overall winning team, makers of the slick Hi, I’m “internet nametag” site, are now the proud owners of a Spreedly Kickstart. As with a lot of the other teams this year, they plan to continue on with the application and build it out into a full-fledged business, and we hope Spreedly helps with that. Making money tends to be an important factor in business success, so we’re betting it will!

In addition to the frontrunner, Spreedly also sponsored a special “Ready to Earn” category, and it’s my pleasure to announce that the winner is: Affiliapp! We laid out three criteria for winning the Ready to Earn prize:

• a clear business model,
• an application that offers real value, and
• a working Spreedly integration

Affiliapp has all three of these in spades, but what really impressed us was that Affiliapp has double Spreedly integration. Not only does it manage its own subscriptions via Spreedly, it also allows a business using Spreedly to plug in their credentials and get tailored information based on Spreedly transaction data! Such extreme awesomeness simply couldn’t go unrewarded, so we’re going to be hooking the one-man team behind Affiliapp up with a Kickstart. We can’t wait to see how it continues to improve.

Congratulations to the Hi.im team, the Affiliapp team, and to all the other great competitors that made the Rails Rumble such a smashing success. We’re already looking forward to next year: what will you build?

A few weeks ago we rolled out an important tweak to how automatic renewals are handled in Spreedly. Previously, all renewals were run at least 24 hours before the subscription expired so that if there was an error there was some time to correct it before the subscription lapsed. For a long time this worked just fine, but there were some definite weaknesses with it, such as 24 hours being a really short amount of time within which to correct a problem.

As part of some other work that we were doing, we decided to go ahead and implement grace periods for renewals, which are a major improvement over the previous setup. With grace periods, we attempt a renewal less than 12 hours before the subscription expires. The key difference is that if the renewal fails, we allow continued access for the grace period (currently hard coded to three days) during which time the problem can be resolved and the subscription successfully renewed.

Features like grace periods are pretty mundane and low-level, so I hope I haven’t bored you too much. That said, it’s just another example of our ongoing quest here at Spreedly: to handle the grunt work of billing so you don’t have to. We want you spending your time making your product awesome, not on trying to get paid. We’ll navigate those waters so you don’t have to!

If you have any questions about grace periods don’t hesitate to drop a comment below or send us an email.

Bob Walsh of the Startup Success Podcast was kind enough to invite me on the show recently, and the final version of our conversation went live a few days ago. Give it a listen if you haven’t already – I think some real gems came out in our discussion. As always when I do an interview like this, I had a blast talking Spreedly and business with Bob, and am super grateful to him for the invitation and the stimulating chat.

On a related note, be sure to check out the Startup Success Podcast archives for some other great topics and interviews. It’s obvious that Bob lives and breaths startups, and I know the topics he covers on the podcast and in his books are apropos to a lot of the businesses using Spreedly. Oh, and don’t miss out on Bob’s upcoming startup (which of course uses Spreedly!) – StartupToDo. It looks like a fantastic resource from someone with a ton of experience.

Thanks Bob – we’ll have to do it again in a year or two to see how things develop between now and then!